Negotiating rent increases - tips for landlords

By Josh Hall

Following a period of market uncertainty, residential landlords are
riding high again.

Increased demand for rental property, driven in part by a continued lack
of mortgage availability, has meant that rents in many parts of the
country are being pushed ever higher. This places landlords in an
enviable position.

But, while higher rents are good news for landlords, the process of
negotiating rent increases can be a difficult one. You should be
prepared to haggle, and you should make sure that you are properly
prepared before beginning. Here are some tips to help you through the
process.

1. Do your research

It is important that you do your research before beginning the
negotiation process. As average rents are rising, tenants are (quite
rightly) becoming increasingly savvy. They are more likely than ever to
have done their homework before the tenancy is up for renewal, and it is
vital that you do too.

While rents have risen in many parts of the country, the degree to which
they have increased varies quite significantly by area. Have a look
around to see what sort of changes have been noted in similar properties
in your area. You can do this quickly and easily on sites like
Findaproperty.

2. Be reasonable

The importance of a reasonable, personable approach really cannot be
overstated. Remember that the process (and the outcome) could have a
significant impact on the tenant’s financial situation, and that all
such negotiations should be carried out in a sensitive manner.

Rent negotiations are amongst the most common causes of conflict between
tenant and landlord. By approaching them in a sensitive way you can help
to prevent disagreement and maintain a good relationship.

3. Be prepared to haggle

You should not necessarily expect your tenant to accept a rent increase
without condition. Increased scrutiny of rent rises has meant that
landlords must now be prepared to haggle, and to consider what they will
be asked for in return for an increase.

If work needs to be done on the property, you should be prepared to do
it as a condition of a rent increase. Of course, you are not normally
obliged to do so (unless work is required to make the property
habitable), but many tenants will be more willing to accept an increase
if you are willing to fix some niggling problems.

4. Understand the appeals process

In the event that you cannot come to an agreement with a tenant who
holds an assured tenancy, the tenant might choose to appeal to a Rent
Assessment Committee (RAC). This is an independent body that adjudicates
on rent disputes. The RAC is meant to provide a simple means by which
disagreements can be resolved without the necessity for lengthy court
processes.

The RAC makes their decision by taking submissions from both parties,
and conducting a hearing. You can attend the hearing yourself, or you
can send someone else. The committee will make a judgement, which can
only be challenged in the High Court.

Although RACs are not particularly commonly used, it is important that
you are aware of them. You should also understand that the type of
tenancy agreement you have will determine some of the rights that the
tenant enjoys. More information on tenancy agreements is available from
DirectGov.

5. Do a cost-benefit analysis

In today’s landlord-friendly lettings market, intransigence in
negotiation can be tempting. You might feel as if you have no need to
negotiate, because you could find another tenant who would be willing to
pay a higher rate.

If you are having difficulty coming to an agreement with your tenant,
don’t be hasty. Remember that there can be significant costs associated
with finding a new tenant, even if you choose not to use an agent. In
many cases it may be more sensible to negotiate and accept a lower rent
than to go through the process of finding new tenants and risking void
periods.